Naira, Nigeria’s legal tender, has depreciated to an all time low of N424 per dollar at the Investors and Exporters (I&E) forex window, the nation’s official foreign exchange market window.
After trading on Wednesday, Naira lost 0.80 percent to close at N424.88/$ as against N421.50 closed on Tuesday, data from the FMDQ indicated.
Pressure on the Naira has persisted following shortage of dollars amid increased demand, one dealer said.
Daily foreign exchange market turnover at the I&E window closed at $112.83 million.
Most foreign exchange market dealers who participated in the auction maintained bids between N413.00 and N444.00 per dollar.
The Naira exchange rate, which opened the year on the first trading day in 2022 at N422/US$ on the I&E Window, appreciated to N416.50/US$ as at 15th March 2022, before falling to the current rate.
The I&E window according to the FMDQ was activated in June 2017, and represents the broader FX market, where FX sourced from autonomous sources are traded between authorised dealers, clients and the Central Bank of Nigeria (CBN). This FX window is also the underlying market for the FMDQ Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) benchmark.
Godwin Emefiele, governor of the CBN, noted in March 2022 that Naira has remained largely stable at the Investors and Exporters window, following the demand management policy of the Central Bank.
The CBN’s economic report for the month of February 2022, noted that the naira exchange rate at the I&E window remained relatively stable in the review period despite the upscaling of cyclical and structural demand factors amidst foreign exchange supply constraints. The average exchange rate of the naira per US dollar at the I&E window depreciated by 0.22 per cent to N416.95/US$, in February 2022, compared with N416.03/US$ in the previous month.
According to the report activities at the I&E window slowed, as revealed by the lower foreign exchange turnover. The average foreign exchange turnover was US$0.111 billion in February 2022, a decline of 10.7 per cent, compared with US$0.125 billion in January 2022, indicative of reduced liquidity at the window.
“The exchange rate at the I&E windows have remained stable due to the sustained intervention in the FX market by the CBN. This stability does not however mirror the depreciation that occurred in the Bureau de Change segment,” Adeola Festus Adenikinju, member of the Monetary Policy Committee (MPC) said in his personal statement at the last meeting in May 2022.
In her personal statement at the last MPC meeting, Aisha Ahmad, deputy director in charge of financial system stability, said, “Exchange rate stability remains a key concern and policy focus area for the monetary authority. In particular, demand management and supply stimulation strategies such as growing export proceeds and remittances as long term, sustainable sources of forex supply are critical initiatives in this regard.”